Alfons Ideler, director and head of structured finance at Global Credit Ratings (GCR), answers SCI's questions

Q: How and when did GCR become involved in structured finance?
A: GCR first became active within structured finance over 10 years ago. We began by rating trade receivable transactions in South Africa.

Q: Which market constituent is your main client base?
A: GCR is a full service rating agency, which was established over 15 years ago with claims paying ability ratings and evolved over the years into corporate, government/municipalities, banking and structured finance. Our focus is emerging markets, in particular Africa.

Our head office is in Johannesburg, but we are active all across Africa, with offices in Nigeria, Zimbabwe and Kenya. GCR is actually the biggest rating agency in Africa, both in number of analysts on the ground as well as number of rated companies and transactions.

Q: Do you focus on a broad range of asset classes or only one?
A: We rate structured finance transactions across a wide variety of asset classes: trade receivables, structured preference shares, credit-linked notes, CDOs, RMBS, CMBS, residential leases, future flow, consumer loans, equipment leases, non-performing loans, structured funding vehicles and toll roads.

Q: What are your key areas of focus today?
A: We would like to expand the transactions we are involved in to a broader originator, arranger and investor base. Also we would like to rate more public transactions.

For example, in October we were the rating agency on the South African Fintech equipment lease securitisation (see SCI 28 October). We have two more public transactions in the pipeline for closing in 1Q11.

For structured finance, we are rolling out a set of published criteria that describe our rating approach to structured finance and relevant asset classes. This will make our approach transparent for all market participants, and it creates consistency over all transactions.

We started with the publication of a general report (Global Structured Finance Rating Criteria) and one in respect of consumer ABS (Global Consumer ABS Rating Criteria), and more will follow. The red line for all publications is to be transparent, consistent and to keep things short and focused on headlines instead of trying to describe every potential small aspect. This increases readability and understanding by market participants.

Q: How do you differentiate yourself from your competitors?
A: We are a local rating agency with the analytical team based in South Africa, having local knowledge. GCR's ratings are based on best international methodologies, suitably tailored to account for unique local market conditions. Together these benefits enable us to provide faster, better and cheaper service to issuers and the end-users of our ratings.

Q: Which challenges/opportunities does the current environment bring to your business and how do you intend to manage them?
A: Government will step up regulation and will dictate the requirements under which rating agencies should operate. Overseas regulators are currently very busy with this and the expectation is that South African regulators will follow suit. Accordingly, we are putting procedures in place to comply with any change in regulations.

I think, within emerging markets, there will be a clear shift from the three big international rating agencies to locally operated rating agencies. Market participants feel that the big three are neglecting emerging markets, with their focus being on their key markets (developed). To this extent, we have started a programme where we have intensified contact with all market participants to show that we have the skills, expertise and track record to meet their needs.

Q: What major development do you need/expect from the market in the future?
A: There is a great need for credit analysis, especially in Africa. In order to open up financial markets in Africa, ratings can be a very useful tool to get investors on board.

Not all investors have the time or resources to look at every single corporate name or transaction. A company like GCR is in an excellent position to take advantage of this. Our two largest institutional shareholders are the DEG and Proparco (two big European development finance institutions), which adds to credibility and provides access to their African network.